Hang Seng Index, ASX 200, Nikkei 225: China Stats in the Spotlight as Fed Decision Looms

Key Insights:

• The ASX 200 and Nikkei 225 made gains on Tuesday, while the Hang Seng Index ended the day in negative territory.
• Economic indicators from China weighed on riskier assets while the Bank of Japan sank the Yen, supporting the Nikkei.
• On Wednesday, China PMI numbers and sentiment toward Fed monetary policy will guide the markets.

Overview of the Tuesday Session

On Tuesday, the Hang Seng Index ended the session in negative territory. However, the ASX 200 and Nikkei found much-needed support from the positive US session on Monday.

Containment of the Middle East conflict drove demand for US equities on Monday. On Monday, the Dow rallied 1.58%, with the Nasdaq Composite Index and the S&P 500 seeing gains of 1.16% and 1.20%.

However, economic indicators from China tested the appetite for riskier assets on Tuesday. The NBS Manufacturing and Non-Manufacturing PMIs caught investors by surprise. In October, the manufacturing sector unexpectedly contracted, with non-manufacturing sector activity slowing despite recent stimulus measures.

The Bank of Japan (BoJ) was also in the spotlight. While revising inflation forecasts, the BoJ left interest rates in negative territory. A tweak to the Yield Curve Control policy failed to impress, sinking the Yen. The weaker Yen against the US dollar supported Japanese export stocks.

The Chinese Economy and the Fed in Focus

On Wednesday, investors will likely respond to overnight US economic indicators. US employment costs and consumer confidence figures signaled a positive outlook for demand.

The better-than-expected figures failed to fuel bets on the Fed hiking interest rates. Market bets on the Fed leaving interest rates unchanged supported riskier assets in the US session.

The Nasdaq Composite Index gained by 0.48%, with the Dow and S&P 500 rising by 0.38% and 0.65%, respectively. The gains will likely set the tone for the Asian session on Wednesday.

On Wednesday, the Asian economic calendar also needs consideration. The all-important Caixin Manufacturing PMI will garner investor interest. Economists forecast the Manufacturing PMI to increase from 50.6 to 50.8. An unexpected contraction across the sector would weigh on the appetite for riskier assets.

Beyond the economic calendar, corporate earnings will also move the dial. Sony Corp. (6758) is among the big names to release earnings results.

In the Futures Markets, the ASX 200 and the Nikkei 225 were up 33 and 530 points, respectively.

ASX 200

The ASX 200 gained 0.11% on Tuesday. The S&P/ASX All Technology Index (XTX) fell for a tenth consecutive session. Mining stocks declined on falling iron ore prices, while the big four banks made gains.

Fortescue Metals Group (FMG) rose by 0.09%. However, Rio Tinto (RIO) and BHP Group Ltd (BHP) ended the day down 0.61% and 1.35%.

On Tuesday, Westpac Banking Corp (WBC) and the National Australia Bank (NAB) rose by 0.68% and 0.61%. The Commonwealth Bank of Australia (CBA) and ANZ Group (ANZ) ended the day up 0.35% and 0.65%.

Oils stocks had a muted session. Woodside Energy Group (WDS) fell by 0.15%, while Santos Ltd (STO) ended the day flat.

Hang Seng Index

The Hang Seng Index slid by 1.69% on Tuesday on China growth fears.

Alibaba Group Holding Ltd (HK:9988) and Tencent Holdings Ltd (HK:0700) declined by 2.20% and 2.10%.

HSBC Holdings PLC (HK:0005) fell by 1.84%, with China Construction Bank (HK:0939) ending the day down 0.89%. The Industrial and Commercial Bank of China (HK:1398) gained 0.53%.

Nikkei 225

(Graph for reference purposes only)

The Nikkei gained 0.53% on Tuesday.

Sumitomo Mitsui Financial Group (8316) and Mitsubishi UFJ Financial Group (8306) rose by 1.38% and 2.20%, respectively. The main components had a mixed session.

Sony Corp. (6758) and KDDI Corp. (9433) gained 1.68% and 1.49%. Fast Retailing Co (9983) and SoftBank Group Corp. (9984) rose by 0.36% and 0.13%. However, Tokyo Electron Limited (8035) declined by 0.23%.

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